| Decoupling is the word that’s been thrown around most in discussions about the economic relationship between the US and China over the past decade. Yet in Washington today you can make a strong argument that an actual divorce between the world’s two largest economies seems far less likely than it once did. Ask a senior diplomat in Washington whether they think President Donald Trump will push for the disengagement that the China hawks around him have for years been advocating and there’s a good chance the response will be a simple “no.”. That’s because Trump seems more intent on doing business with China than being a decoupler. And because all the evidence drawn from his first month in office is that he is keener to wage economic war against European allies — or Canada and Mexico — than the China most US policymakers see as the US’s existential rival. As Trump hinted last week, he seems more interested in making a trade deal with President Xi Jinping than the European Union. Even if he has already imposed a 10% additional tariff on Chinese goods and on Friday signed an executive order restricting US investment in China and vice versa. Read More: Trump Directs CFIUS to Restrict Chinese Investments in US But the argument goes beyond Trump’s transactional approach to geopolitics. In a new piece for Foreign Affairs, the authors of a forthcoming book argue against both decoupling and an inflated view of China’s economic might. Less Hawkish The argument presented by Stephen Brooks, a Dartmouth College professor, and Ben Vagle, a policy analyst at the US Treasury, is billed as “The Hawk’s Case Against Decoupling” and could serve as the intellectual justification for the deal-making Trump envisions. Brooks and Vagle believe that pursuing decoupling at a time of relative peace would just provoke Beijing towards extreme actions like an invasion of Taiwan. And that without the support of the very allies Trump is turning on, a unilateral decoupling — the nuclear economic option — would only harm China slightly more than the US. “With a substantial economic relationship left intact,” they write, the US can make the case that “China would incur massive economic retaliation should it tread the path of aggression.” “The United States should thus keep its economic powder dry until a moment of true crisis,” they add. Because doing so “could narrow the range for catastrophic miscalculation between Beijing and Washington.” Evolving Response Brooks and Vagle were undoubtedly writing their book long before Trump was elected in November. So it would be wrong to tie their argument too closely to the new president. Instead, it’s emblematic of how the US side of the decoupling conversation has evolved since Trump was first elected in 2016 following a campaign in which he cast China as a leading villain. Even if the bipartisan consensus about the threat of China has solidified since then, the debate over how to respond is more complex. Jamieson Greer, Trump’s incoming US Trade Representative, has called for a “strategic decoupling,” a term he drew from mentor Robert Lighthizer, Trump’s first-term trade czar. But if you dig into what that actually means it looks remarkably similar to the limited separation the last administration touted. Read More: Trump Proposes New Ship Fees to Challenge China’s Maritime Might Jake Sullivan, President Joe Biden’s national security adviser, oversaw a shift in policy from decoupling to “derisking” and coined the phrase “small yard, high fence” to describe US efforts to limit exports of sensitive technologies. The similarities go further. The investment executive order signed by Trump on Friday builds on a similar one from Biden that was put into action by the US Treasury in October. Like Biden’s, Trump’s is aimed at a limited number of strategic sectors rather than the broad ban China hawks once pushed for. DeepSeek Surprise The evolution in policy reflects how Washington’s view of the China threat has changed. Yes, there is concern at China’s accelerating innovation engine and the Sputnik moment that came with the unveiling of the DeepSeek AI model was clear. Yet there’s also a recognition of China’s economic fragility and the unlikelihood it will overtake the US as an economic superpower anytime soon, as Brooks and Vagle point out. They cite an aggregation of the “most rigorous” studies indicating “China’s GDP is now overstated by around a third” and really just half the size of the US’s. Moreover, they point out, US companies generate 38% of global profits while Chinese firms account for just 16%. Trump has always cultivated relationships. But there’s an underlying reason why he speaks more warmly of China’s Xi than many other leaders. His view of China has also evolved. Which makes decoupling less likely. “There’s a little bit of competitiveness,” Trump told reporters last week. “But the relationship I have with President Xi is, I would say, a great one.” Related Reading: —Shawn Donnan in Washington Click here for more of Bloomberg.com’s most-read stories about trade, supply chains and shipping. | 
